Wont worker co-ops lead to inflation?

posted by andrew plotner | 35pt
February 03, 2018

Here is my reason for thinking so:
Worker co-ops are undoubtedly better than capitalist business model. However i dont think they go far enough as they are still structured in a capitalist market. That means the business is still dependent upon the capitalist money cycle. M-C-M'. What worker co-ops do is guarentee worker rights and protections since the workers won't harm themselves. However as a business they still operate on a profit principle. What i forsee as a potential problem is the same one we witnessed in the 70's when we had strong worker protections. The 70's we saw an inflation cycle that went kind of like this: Wages rise, profits fall, businesses want to increase profits, prices rise, workers realize their wage increase amounted to little and demand more, cycle repeats. Said another way By raising the price you revalorize labour's worth to be less than what it used to be, labour doesn't like it so they demand what they are worth which means a bigger cut of the profits. Buisnesses are always looking for higher profits so with more money floating in the economy they can then raise prices again.
Wont this same cycle still be prevalent with the worker co-op system. The business as a whole will want to profit, after all that benefits the workers. They wont cut the workers pay to increase profit, that is silly in a worker co-op structure. so they raise prices instead. The same cycle repeats which leads to inflation.
Certainly there are arguments that prices wont rise due to competition between co-ops and what not, but the historical example is still there. So my question is how do you combat this potential inflation as it deals with one of the contradictions of capitalism and that is the contradiction of capital itself. Using money to make more money can only ever steal its worth from the labour that went into it. Either 1. what is currently happening where workers are not paid what they are worth. or 2. where workers are paid what their worth but a need for profit generates inflation through rising prices effectively still stealing value from the worker, merely doing it after the fact by devaluing the money through price increases. This contradiction can only lead to two outcomes in my mind. 1. a money funnel to the rich, or 2. massive inflation where confidence is eventually lost in the currency itself.

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Richard D. Wolff is Professor of Economics Emeritus at UMass Amherst and a visiting Professor in the Graduate Program in International Affairs of the New School University in New York. Richard Wolff is also a co-founder and active contributor of his non-profit: Democracy at Work